BlackBerry back in the black for Q4, sells near a million Z10 handsets

CEO says, "It has not been easy, but the BlackBerry team is delivering."

BlackBerry held its financial earnings call for the final quarter of its fiscal 2013 year (like many companies, BlackBerry's "fiscal" calendar is offset from the real calendar by quite a bit—BlackBerry's FY 2013 ended on March 2). The full press release with the call's contents is available if you want to wade through the details, but the overall view for the Canadian smartphone manufacturer is mostly good.

Brief numbers first: BlackBerry missed its sales projection, doing $2.68 billion of sales on projections of $2.83 billion. However, BlackBerry's GAAP income for the quarter was $98 million, which works out to 18¢ per share. The quarter's results are up both from the previous quarter ($14 million, 3¢ per share) and from 4Q last year (a loss of $118 million, 23¢ per share). This leads to an adjusted earnings of 22¢ per share for the quarter, which the Wall Street Journalnotes is far ahead of the 29¢ per share loss that many were expecting.

The swing in fortunes is of course due to the ongoing around-the-globe rollout of the BlackBerry Z10, one of two devices on which BlackBerry has bet its future. BlackBerry is also going through a top-to-bottom reorganization brought about by CEO Torsten Heins, shedding layers of jobs and management in order to stay competitive. This "strategic reorganization" is part of why BlackBerry was able to deliver profits in the quarter, in spite of missing sales expectations.

The call also included news that former CEO Mike Lazaridis is departing. Lazaridis has been a member of BlackBerry's board of directors since last year after vacating the CEO's office (which he shared with Jim Balsillie).

BlackBerry is also close to releasing its keyboard-equipped Q10 smartphone within the next quarter. The physical keyboard harkens back to the pre-iPhone, pre-Android era where BlackBerrys dominated the smartphone landscape, and there is still a very vocal group of physical keyboard fans who are waiting for the Q10 with anticipation.

The news isn't all rosy, though, and not everyone is convinced that BlackBerry has put its long dark financial night behind it. The Wall Street Journalominously notes that "The percentage of RIM shares on loan—a proxy for short-selling activity—stands at about 30% of the combined Canadian and New York stock listings." The WSJ calls this a near-record high for BlackBerry. Investors are shorting BlackBerry en masse—borrowing and selling shares they don't own with the goal of buying them back later at a lower price and returning them to the lender, thereby making money because the stock fell in value. This much shorting of RIM can easily be taken as a sign of wide-spread expectation that BlackBerry's rally is only temporary.

In spite of shipping about a million Z10 handsets, BlackBerry usage numbers are down—BlackBerry reports that it lost 3 million users world-wide, falling to 76 million from 79 million. CEO Thorsten Heins claims that this loss is mainly due to the expiration of existing enterprise agreements. The number of BlackBerry users will likely continue to fluctuate over the next few quarters as both the Z10 and Q10 devices filter out to the global market and folks who were reserving judgment for the new platform decide to commit to BlackBerry, or permanently jump ship to Android or iOS.

For a more thorough dissection of the call, hop over to The Financial Post and check out Matt Hartley's and Matt Braga's liveblog of the entire call. They've peppered in some insightful commentary among the numbers, and it's a good read.

41 Reader Comments

Wait... Permanently jump ship? 50% of BB10 sales so far are from former iOS or Android users. People can and will change platforms and BlackBerry isn't just relying on their current userbase to propel BB10.

This somewhat reminds me of what Jobs did when he returned to Apple: A lot of deep, serious cuts and reorganizations in order to show some "good news" to analysis and investors, with many remaining skeptical about the company's long-term prospects. You can stop taking on water, but it's another thing altogether to begin steaming toward a new destination. By all indications, Torsten has proven his mettle so far. I'm cautiously impressed with what Blackberry has done.

While the mass shorting of the stock is probably unwarranted (I think if they were in serious immediate danger, the hammer would've already fallen -- by all indications, the new products are good, and the people who choose one are happy with them). The question remains to what level will Blackberry rise: Their former-glory, or scrappy niche player that eeks out profits but remains largely on the sidelines while Android, and to a lesser extent iOS, sets the stage?

While Blackberry reported a positive quarter, I'd take that with several grains of salt. The 1 million units they have claimed are units shipped to stores, not sold to end users. Additionally, no matter the cause, losing 3 million customers in one quarter is alarming. Statistics about uptake on BB10 Enterprise Server and how the US launch fairs will be very important. Next quarter should give us a good view of whether they have reestablished a niche or whether they are the next JC Penney.

As much as I'd like to buy a Z10, I have a very hard time convincing myself to rebuy my whole library of apps again for that platform, and this is also true for Windows Phone. I can't imagine I'm alone in this situation. App numbers are only part of the problem, if I already invested in one platform, it makes it harder for me to start all over on another one.

If they really would like to push for adoption they should subsidize the apps that you can prove you own on another platform (thay can put an upper limit to the amount of money and apps to prevent abuse).

It's impolite to pile on, but if I had to make a guess I'd say this is a combination of shipping a lot of handsets to resellers and operators that may not necessarily end up with end users, and pent-up demand from people who are Blackberry diehards and have been waiting for the company to ship something that brings the lineup back closer to the front of the pack.

I still think the prognosis for the platform is not particularly good, and unlike MS, I'm not sure their pockets are deep enough or their per handset margin high enough to keep grinding through without serious sales growth. We'll see, though.

Pardon me for sounding like I'm shilling, but I am actually rooting for blackberry revival, and seeing this as an opportunity for lesser known apps to break the "monopoly" of bigger services - Netflix for movies and tv shows, Skype for VOIP, etc.

30% short-selling seems awfully high. Does anybody have a perspective on how this compares to other companies? Say ones whose stock price is flat right now, or who aren't doing that great but aren't in immediate danger. Is this going to drag down their stock price artificially because of the activity, or does it not have an actual impact on the price in the end?

My gut feel is that many people, after coming full circle with different form factors and type interfaces, they would opt for a phone that -

-is an easy phone to use for talking (not a phablet!)-not too bulky (not a samsung giant phone)-yet easy to type with (not a tiny android phone)-has good battery life (not an iphone nor a feature-packed samsung)-has good camera, wifi, and gps functionality aside from phone company wireless (all pretty much do)

and the q10 would appeal to them. Admittedly, I'm one who'd rather have a physical keyboard rather than a large screen as I would use a tablet or a laptop if I wanted large screens.

It would seem that the q10 would have this market all to itself.

For those who'd rather have a large screen that still fits in their pant pocket, and likes the bulge in today's tight pants that squeeze their balls (if you're a gal you're lucky), the z10 can hold a candle to the iPhone and the smaller samsungs. All squeeze equally well.

For those who have super eyesight and would prefer to have an all-in-one cellphone/tablet/desktop, blackberry currently doesn't have a product and I doubt if blackberry really cares. The phablets may be a hit for some people, but the question isn't whether this market will grow. It's about when people get tired of this arms race. I don't imagine we'll reach a point when you have a backpack to carry an all-in-one and still call it a phone.

In short, I really really think blackberries make a lot of sense in that it doesn't aim to be everything for everyone, and that it doesn't have to satisfy the long tail.

Which may be why there is a strong possibility it's not hype that many blackberry adopters used to be android and iPhone users.

These results point to BlackBerry remaining 3rd major player in mobile platform wars and proves that they can be profitable with a 6 million devices sold per quarter. They control their platform, both software and hardware and also have QWERTY phone market for themselves.

I don't think that Apple and Google will worry about BlackBerry but Microsoft and Nokia are definitely looking at the mirror and wondering how BB sold more legacy devices (5M) compared to Nokia's WP8 phones for the holiday quarter.

These results point to BlackBerry remaining 3rd major player in mobile platform wars and proves that they can be profitable with a 6 million devices sold per quarter. They control their platform, both software and hardware and also have QWERTY phone market for themselves.

I don't think that Apple and Google will worry about BlackBerry but Microsoft and Nokia are definitely looking at the mirror and wondering how BB sold more legacy devices (5M) compared to Nokia's WP8 phones for the holiday quarter.

Because people will often stick with what they know and what they already have. If you are using an older Blackberry device which has relatively crappy functionality as compared to an iPhone, WP7/8, or Android phone then you either don't care so much about those bells and whistles (or you're stuck on a contract without a good early upgrade option).

So if you're a Blackberry user and you get a new phone, there's a reasonable chance that you might want to stick with a Blackberry.

Sure RIM can be profitable, but they also cut costs like crazy. And the big question is: what happens in a year or two once most of the Blackberry users updated to the BB10? Will they be able to attract new users or sell new handsets very easily?

My gut feel is that many people, after coming full circle with different form factors and type interfaces, they would opt for a phone that -

-is an easy phone to use for talking (not a phablet!)-not too bulky (not a samsung giant phone)-yet easy to type with (not a tiny android phone)-has good battery life (not an iphone nor a feature-packed samsung)-has good camera, wifi, and gps functionality aside from phone company wireless (all pretty much do)

<things that a blackberry supposedly is>

I don't mean to sound insulting, but have you used any of these phones? The iPhones/GSIII/Note II have great battery life. The iPhone 5 is still smaller than most low-end Android phones and much harder to type on than a Swype/Swiftkey X keyboard.

Z10: 130.0 x 65.6 x 9.0 mmGS3: 136.6 x 70.6 x 8.6 mmThese are nearly the same size, but keep in mind the Z10 has a 4.2" screen while the GS3 gets a 4.7" in there. The GS4 will be the same size as well, but bumps it to 5" in the same space. The idea that the Z10 is a smaller phone for people who don't like the "giant" phone trend doesn't really pan out.

The Note is obviously something else altogether though. (I'll probably be getting one once my contract is up, but I understand that most other people wouldn't find it reasonable as a phone.)

If they play their cards right, and get back in the business world's good graces, they might actually have a shot of making a real comeback! I'm currently entrenched in the Android ecosystem, but I like competition, and I feel like the more the merrier, as that is what pushes innovation. I hope BB does great this year. Good on them for refusing to throw in the towel just yet.

When companies do drastic re-orgs, it can be in a positive fashion to optimize dept's and cut overhead. Make it lean and mean while still innovating and moving ahead. But, there's also the old MBA-style "slash-n-burn" to show a quick profit before everyone realizes you've gutted necessary things that will make the whole company tank in 5 years. We'll have to see how that plays out.

GREEN FLAG

Using QNX, they've gotten back in the game with their first new phones being near-par with Apple and Windows. This was only from them dicking around with QNX for a short-while. Given 5 years, we could see them possibly make some really innovative strides with QNX-based phones. QNX could possibly get leveraged to extend battery life to crazy amounts, and it should help prevent apps from crashing the whole phone. I think things will only get better in regards to their phones.

Hopefully, like Apple, they've gotten back to their technical roots, and were only suffering a few years of MBA-style stupidity.

As I've said before, I've got money riding on this: I bought shares in BBRY. They have all the hallmarks of making a good come-back. Even if it's not smartphones, the QNX acquisition will give them a huge field of electronics to move into. I'm betting on the dark horse.

I don't mean to sound insulting, but have you used any of these phones? The iPhones/GSIII/Note II have great battery life.

Compared to what? My old Palm smartphones would last 3 to 4 days on a charge, and so did my Blackberry when I switched to that after HP screwed them up worse than Palm did. I now have an Android device and I can get a full day on a charge, and that is only because I rooted it an installed a custom ROM. Before that I would have to charge it around noon time if I wanted to make to the end of the work day. I have no user experience myself with an iPhone but I have heard battery life is not all that good on them either, one day. I do not consider a smartphone lasting one day or less having great battery life. If both Palm and Blackberry can give me several days on a single charge than I should expect nothing less from everyone else, and anything less than that is a disappointment.

I don't mean to sound insulting, but have you used any of these phones? The iPhones/GSIII/Note II have great battery life.

Compared to what? My old Palm smartphones would last 3 to 4 days on a charge, and so did my Blackberry when I switched to that after HP screwed them up worse than Palm did. I now have an Android device and I can get a full day on a charge, and that is only because I rooted it an installed a custom ROM. Before that I would have to charge it around noon time if I wanted to make to the end of the work day. I have no user experience myself with an iPhone but I have heard battery life is not all that good on them either, one day. I do not consider a smartphone lasting one day or less having great battery life. If both Palm and Blackberry can give me several days on a single charge than I should expect nothing less from everyone else, and anything less than that is a disappointment.

The battery life for my iPhone 4s is much better than my. BB 9900's battery life.

I don't mean to sound insulting, but have you used any of these phones? The iPhones/GSIII/Note II have great battery life.

Compared to what? My old Palm smartphones would last 3 to 4 days on a charge, and so did my Blackberry when I switched to that after HP screwed them up worse than Palm did. I now have an Android device and I can get a full day on a charge, and that is only because I rooted it an installed a custom ROM. Before that I would have to charge it around noon time if I wanted to make to the end of the work day. I have no user experience myself with an iPhone but I have heard battery life is not all that good on them either, one day. I do not consider a smartphone lasting one day or less having great battery life. If both Palm and Blackberry can give me several days on a single charge than I should expect nothing less from everyone else, and anything less than that is a disappointment.

I get about two and a half days on my Galaxy Nexus (CDMA version) running MIUI (Android 4.1) with JuiceDefender managing my Wi-Fi radio state, though I probably don't use it all that hardcore. A lot of these phones can get 7+ hours of screen time, and a few days of idle on a lower-power 2G connection for background data. I recently replaced a friend's dead iPhone battery and was legitimately surprised at how long it lasted given the tiny battery (though my previous experiences were with an abysmal iPod Touch 3rd gen.)

Of course, I really doubt BlackBerry can solve any battery life issues when it's using Android's Dalvik architecture on top of it's own, unless it wants to go back to 320x240 tiny TN panel displays. Hopefully Sharp can turn something around with their future low-power LCD panels, because right now it seems like all we have to look forward to is better OLED performance.

As much as I'd like to buy a Z10, I have a very hard time convincing myself to rebuy my whole library of apps again for that platform, and this is also true for Windows Phone. I can't imagine I'm alone in this situation. App numbers are only part of the problem, if I already invested in one platform, it makes it harder for me to start all over on another one.

If they really would like to push for adoption they should subsidize the apps that you can prove you own on another platform (thay can put an upper limit to the amount of money and apps to prevent abuse).

I bought one, and am very happy with it. It feels good to hold, not too large, with a sharp display, feels polished. The whole Hub concept is great, all your messages ready to go under your thumb. I found the soft keyboard to be very nice, easier to use than the iPhone.

Battery charge is about a day and a half for me.

I am not too invested in apps, I tend to not care about them beyond a few RSS feed readers. For me it is a communications device: voice, text, emails, tweets, facebook, etc. It is fulfilling that role wonderfully.

I don't mean to sound insulting, but have you used any of these phones? The iPhones/GSIII/Note II have great battery life.

Compared to what? My old Palm smartphones would last 3 to 4 days on a charge, and so did my Blackberry when I switched to that after HP screwed them up worse than Palm did. I now have an Android device and I can get a full day on a charge, and that is only because I rooted it an installed a custom ROM. Before that I would have to charge it around noon time if I wanted to make to the end of the work day. I have no user experience myself with an iPhone but I have heard battery life is not all that good on them either, one day. I do not consider a smartphone lasting one day or less having great battery life. If both Palm and Blackberry can give me several days on a single charge than I should expect nothing less from everyone else, and anything less than that is a disappointment.

I would be shocked if the BB Z10 gave more than a day (maybe two) before needing a recharge. "Several days" is completely unrealistic for any smartphone on the market now.

Here's one typical comment after an update meant to improve battery life:

Quote:

I have to concur. In Calgary we have LTE and after the update yesterday, decided to run with LTE on all day (was on HSPA+ before). I just plugged my phone in 10 minutes ago and it was at 20% after about 20 hours and moderate use. Very impressed. Outshines those other phones...

As much as I'd like to buy a Z10, I have a very hard time convincing myself to rebuy my whole library of apps again for that platform, and this is also true for Windows Phone. I can't imagine I'm alone in this situation. App numbers are only part of the problem, if I already invested in one platform, it makes it harder for me to start all over on another one.

If they really would like to push for adoption they should subsidize the apps that you can prove you own on another platform (thay can put an upper limit to the amount of money and apps to prevent abuse).

While we're at it, would you like a pony, too?

Just a suggestion you smart-ass. Clearly getting people to reinvest in a new platform is hard without any incentives. This particular suggestion is one of the many possible ones.

-is an easy phone to use for talking (not a phablet!)-not too bulky (not a samsung giant phone)-yet easy to type with (not a tiny android phone)-has good battery life (not an iphone nor a feature-packed samsung)-has good camera, wifi, and gps functionality aside from phone company wireless (all pretty much do)

It would seem that the q10 would have this market all to itself.

What are you talking about? The Q10 doesn't have a monopoly on that market at all, it's a very late entrant. You can find DOZENS of Android phones that fit everything in your personal wish-list (which you vainly insist EVERYONE else must want, too). You can get tiny android phones, giant android phones, slider android phones, portrait keyboard android phones, etc.

Despite the shorting ( which I think will lose those investors money) the stock continues to climb overall. One analyst has a target price of over $70 for the stock (presently ~$15-$17) so substantial profit is possible.

The phones and the platform are good. We'll see over the next three quarters.

"BlackBerry back in the black for Q4, sells near a million Z10 handsets"

It's becoming difficult to read Arstechnica because everything is written with poor reviewing of the correctness of the text before publication. BlackBerry didn't sell near a million Z10 devises, it shipped this number which is a totally different story. And actually the author contradicts himself because he indicates further down into the text that it's actually shipments. Did the author even bother to read again what he wrote?

"The swing in fortunes is of course due to the ongoing around-the-globe rollout of the BlackBerry Z10, one of two devices on which BlackBerry has bet its future."

Really? How can this be with flat revenues growth? Its seems more that the return to positive incomes have little to do with the Z10 but rather on BlackBerry having taken the radical measures to reduce the operating costs. And again given that the million of Z10s that BlackBerry is claiming is not sales but shipments, it's difficult to believe that the Z10 is helping BlackBerry.

I have to respond to the posts defending the hardware keyboarding a cellphone. They are so overrated. I have a friend who just moved to Wells Fargo and had to get a blackberry to get his corporate email on the go (he is keeping his old android phone around for everything else, as are most of his coworkers). This is the latest Bold with a touchscreen and everything (Wells probably won't certify any BB10 devices for a year, at least). The keyboard is total crap. Yes, this is speaking as an iPhone owner who has never used one of these physical touchscreen phones extensively before. But still, I just don't see the appeal. The keys are smaller than the onscreen keys of an iPhone or any decent android phone, so you basically have to use the tips of your nails. It is so horrible. I don't even have to look at the keyboard on my iPhone most of the time, and the blackberry physical keyboard is such a step back.

Lee Hutchinson / Lee is the Senior Reviews Editor at Ars and is responsible for the product news and reviews section. He also knows stuff about enterprise storage, security, and manned space flight. Lee is based in Houston, TX.